Overview of Economic Policies of Successive Government of Myanmar
Overview
After gaining independence from British colonial rule in 1948, Myanmar entered a phase of economic development while adhering to the regulatory framework established by the British. The country, often referred to as the “Asia Rice Bowl,” held the potential for growth. However, internal divisions within the Anti-Fascist People’s Freedom League (AFPFL), the ruling party at the time, and the emergence of rebel groups posed challenges to Myanmar’s progress. By contrast, due to political instability and failure of other sectors in Myanmar caused to the first ever military coup led by General Ne Win, one of Thirty Comrades. Since the, Ne Win regime controlled the whole country and enacted policies centered on nationalization, land reform, and state control over vital businesses. Myanmar’s journey towards economic development after independence was marred by internal divisions, political instability, and the implementation of ineffective policies. The subsequent military coup and the regime’s focus on nationalization and state control over key sectors further derailed the country’s economic trajectory. These challenges and missteps marked a significant setback for Myanmar’s development process.
(1) Economic Policy Under U Nu’s Administration (1948–1961)
Under U Nu’s leadership, the administration adopted a mixed economy model that combined elements of socialism, nationalism, and democracy. This approach guided the implementation of various key economic policies, including land reforms, industrialization initiatives, fiscal measures, and foreign trade strategies. In a significant address to the Parliament on April 5, 1960, U Nu expressed his commitment to limiting state involvement in the economy. He also assured that no existing private enterprises would be subjected to nationalization throughout his four-year term as the Prime Minister(Butwell, 1962).
U Nu’s stance on the nationalization of agricultural land and major industrial businesses deepened concerns and impeded economic advancement in Myanmar. Additionally, there was a lack of comprehension within the government regarding the unique needs and importance of the agricultural sector (Myat Thein, 2004). Additionally, in the same year, the Soviet Union agreed to provide material and technical support to Burma in exchange for the latter’s rice exportation to the former. Burma’s first 5-year economic plan was introduced in 1956–1957 and the second plan implemented between 1960 and 1964 (Odaka, 2016; Suehiro,1998).
The military coup on March 2, 1962, was a reflection of the shortcomings and failures of U Nu’s leadership in addressing Myanmar’s significant economic and social challenges. The economic mismanagement by U Nu and his political association, coupled with their inability to control the divisive tendencies among the country’s ethnic groups, contributed to the coup.
U Nu’s endeavor to connect Western-influenced socialism with traditional Buddhism was an attempt to make the socialist ideology resonate with the broader population but faced significant obstacles (Butwell, 1962).
Various economic initiatives were introduced, however they were frequently poorly and ineffectively implemented. Economic program execution was hampered by insufficient coordination, ineffective bureaucracy, and corruption, which reduced their practical effectiveness. Under U Nu’s leadership, policy priorities changed frequently, which made economic decision-making unstable and inconsistent.
(2) Economic Policy under Ne Win Regime (1962–1988)
On March, 1962, General Ne Win staged the coup over U Nu’s administration for the reason of political instability and emergence of rebel groups against the government. He took advantage his position to take the Prime Minister position and led the country by his own way called “Burmese Way to Socialism”. The trend towards complete isolation from the international community began under the Ne Win Administration. Economic development remained sluggish. Instead of utilizing civil officials with experience in economic development, military staff with little exposure to economic management were put in charge of formulating economic policy.
Moreover, in order to ensure loyalty to the military elite, military staff were from time to time replaced with equally inexperienced staff (Myat Thein 2004).
The government intervened excessively in agriculture in order for rice to be provided to the government at low prices. This allowed the government to continue its supply of rice to public employees as a form of payment in kind. Moreover, it seems that the government lacked the sufficient understanding of the importance of the financial sector A number of political and economic reforms were started by the military government while Ne Win was in power.
The Burmese Way to Socialism ideology placed a strong emphasis on the state’s control over the means of production, a dedication to social welfare programs, and a redistribution of wealth. It also promoted the value of independence and self-sufficiency in an effort to lessen the nation’s dependency on foreign help and investment.
The ideology known as the Burmese Way to Socialism was marked by its isolationist tendencies, totalitarian rule, superstition, distrust of foreigners, hostility towards China, and a rejection of Cold War politics. Scholars have predominantly labeled this ideology as a “complete failure” and attribute it to transforming Myanmar, once considered one of Asia’s most prosperous nations, into one of the world’s poorest. The consequences of the Burmese Way to Socialism included heightened poverty, inequality, corruption, and international isolation, leading to a situation that has been described as “disastrous.” (Mehden, 1963) (https://doi.org/10.2307/3023620)
The government printed money in order to remedy budget deficits, which accelerated the pace of inflation. The economic growth rate in real terms became negative in the latter half of the 1980s. Finally, Myanmar officially was recognized as a Least Developed Country (LDC) by the United Nations in 1987.
Konosuke Odaka (2016) stated that while the investment rate in neighboring countries was on the rise, Burma experienced an opposite trend at that period.
(3) Partial Market-Oriented under Than Shwe Regime (1989–2010)
From 1962 to 1988, Myanmar pursued the ‘Burmese Way to Socialism’, a variant of central planning with self-imposed isolation from the international economy. More than two decades have passed since 1988, when the former junta announced the transition to a market-oriented economy. Due to the peculiar gradual approach to transition, however, it is considered that the transition is still halfway. The new government inherited the negative legacy of the economic transition to a market-oriented economy. But it is not fully market-oriented but it was a partial one.
Between 1989 and 2010, political power was concentrated in the hands of the State Law and Order Restoration Council (SLORC), which was later reconstituted as the State Peace and Development Council (SPDC). The SLORC (and the SPDC) was dominated by a small group of senior military officers who sat at the top of the power structure. Due to diverse initial conditions and reform strategies of the governments, transition economies took diverse paths in transitioning to market economies, with varying degrees of success in terms of economic performance. But, Myanmar still was an isolated country in the world due to international sanction for the reason of military regime. Under his regime, international outbounds were aggressively discouraged, and foreign inhabitants were kept to a minimum.
Despite the abolition of Ne Win’s Burmese Way to Socialism, a socialist economic atmosphere persisted during the Than Shwe regime. The military government exerted significant control over most private enterprises, while Regional Cooperatives were established to facilitate the provision of local products and essential food items to the people.
After 1988, the regime retreated from a command economy. It permitted modest expansion of the private sector, allowed some foreign investment, and received much needed foreign exchange. All fundamental market institutions are suppressed. Private enterprises are co-owned or indirectly owned by the state.
(4) Reforms under Civilian Government (2011- 2020)
Myanmar has undergone a significant transition from a long-standing brutal dictatorship to a quasi-democratic nation starting from 2011 after the very first election in 2010. But, the military continued to wield substantial political and economic influence, backing their nationalist party called “Union Solidarity and Development Party” (USDP).
The transition in Myanmar marked a significant turning point in various sectors, including politics, education, social welfare, and the economy. Notably, there were noticeable changes compared to the previous military regime. One prominent development was the increased accessibility and usage of the internet, resulting in a rise in internet surfing activities. Additionally, the utilization of mobile devices gradually expanded, contributing to enhanced connectivity and communication within the country.
During the period from 2011 to 2020, one notable change in Myanmar’s economy was the shift towards a free-market-oriented approach. The country embraced economic reforms that aimed to liberalize and open up its economy. This transition marked a departure from the previous isolationist policies, as Myanmar actively welcomed foreign investors and encouraged their participation in various sectors and it reached with an average annual growth rate of around 7% to 8%.
Despite noticeable economic development in Myanmar compared to previous decades, there were still significant flaws in the country’s economic policies under the civilian government. One notable issue was the difficulty faced by small and medium-sized enterprises (SMEs) in accessing financial support. Limited access to credit and financial services hindered the growth and development of these enterprises, constraining their potential contribution to the economy.
Furthermore, although some international sanctions were lifted during this period, certain restrictions persisted, creating barriers for Myanmar businesses to access international markets and financial services. These limitations impeded the country’s ability to fully integrate into the global economy and leverage international opportunities for trade and investment.
In 2020, Myanmar’s economy faced significant challenges due to the global COVID-19 pandemic. The country experienced a sharp economic slowdown, disrupted supply chains, and reduced domestic and international trade. Furthermore, the coup d’état in Myanmar further worsened the economic situation, reversing the progress made and plunging the country into a period of uncertainty and instability.
